American motivational speaker Robert H. Schuller's two famous quotes "Tough timesnever last but tough people do." and "Problems are not stop signs they areguidelines." have lot to guide us in these tough days. Slowing growth in some of theleading global economies impacted currencies. But there was positive news in terms offaster-than-anticipated economic growth recovery in the United States which providedmomentum for the global economic recovery.
Meanwhile India's economy under the leadership of Prime Minister Shri Narendar Modicontinues to be midst of a recovery with lower fiscal and current account deficit lowerinflation and weak commodity prices. Our country's growth seems poised to return to ahigh-growth path. It is in this context that Mahamaya Steel continues its quest forsustained growth.
The year also saw steep decline in the demand and pricing of steel product across theboard. The financial year 20015-16 saw domestic finished steel production declining by 1.9per cent as a substantial chunk of the incremental domestic demand was captured by theburgeoning steel imports.
With weak international steel prices domestic manufacturers were reluctant to pushexports which contracted by over 27 per cent during the previous fiscal. On the rawmaterial front India's iron ore production grew by 23 per cent in the last fiscalreaching 155 million tonne. It is expected to increase further this year and prices areunlikely to recover in the near term which would be beneficial to domestic steel mills.
The scenario is expected to change as recent report released in June 2016 by ratingagency ICRA says that domestic steel players are likely to enjoy better profitability inthe near term due to improved steel prices in the current year supported by imposition ofminimum import price (MIP) by the government. Post the operationalisation of MIP; domestichot-rolled coil (HRC) prices have witnessed a sharp increase of about 25 per cent fromtheir lows reached in February 2016.
According to ICRA's research update report on the steel industry players can seeadditional gains due to an increase in sales volumes as imports are likely to reduce inthe current year. Although MIP is scheduled to expire in the second quarter of the fiscalcurrently buoyant international prices along with the extension of safeguard duty (SGD)up to March 2018 will continue to help Indian steel producers.
Despite tough environment with the sector the company achieved a remarkableperformance on the operational front. The company has achieved a remarkable 10 per centincrease in the capacity utilisation of both divisions and 30 per cent increase in salesquantity of its main products (billets & blooms by 24 per cent structures by 35 percent). However due to continuous fall in market prices of company's products the revenuesfrom operations grew by 6 per cent. Revenues from operations for the year ended March 312016 stood at Rs. 30926.31 lakhs against Rs. 29145.42 lakhs in the previous year. Howeverdue to increase in capacity utilisation by 10 per cent the company has able to save Rs.62.72 Lakhs on account of Operational Efficiencies in Contractor Payments and LowerBurning Loss. The year ended with huge challenges on all fronts. The performance ofcompany drew no comfort with a 963.43 lakhs during financial year 2015-16.
Meanwhile the company is replacing its induction melting furnace which will help toreduce on production cost and maintenance cost in our down time the whole work will becompleted within 2-3 months this is a new technology furnace. It gives effect in powerconsumption which will give saving up to Rs. one crore in a year. Going forward thecompany is looking to explore opportunities in the renewable energy sector by utilisingclose to 100 acres of land available close to company's current operations. An expertgroup within the organisation is being set up explore this opportunity.
With the current market scenario set to improve the company has already improved ourproduction quantity wise so that we can capture the opportunity which can directly affectour profit ratio. We are glad to inform that in the first two months of the currentfinancial year (FY-20016-17) the company has already booked new orders of Rs 1250 lakhs .
Further we also glad to inform our shareholders that our company has been awarded for"up scaling energy efficient production and implementation of energy efficienttechnology by UNDP.
I extend my sincere thanks to the Board of Directors Management and each & everyperson of Mahamaya Group.
To Shareholders on behalf of Board I thank you for your continued support and lookforward to a positive 2016-17 and beyond.
With best regards: